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Evelyn Said:

When buying a fixed rate mortgage - what does the term "Overall Cost For Comparison" mean?

We Answered:

The overall cost is the total cost for the term of the mortgage.
That is 5,10,25 years.

It should show all costs for getting the mortgage any fees that are payable on completion of term etc.

AER is the annual equivalent rate which is interest rate that you will pay.

The for comparison is so you can compare the overall cost of the mortgage against any other quotes from banks, building societies who will have different overall costs.

If you have not any other quotes then it would be a good idea to get some particularly in these 'credit crunch' days - the quote you've got may be very good - on the other hand - you'll never know unless you look!

Regards

Jeremy Said:

I'm shopping for a mortgage!! I want to use lending tree or one of the online comparison sites ...?

We Answered:

Please don't use one of those online sites. There are so many lenders taking advantage of people right now that it's scary. You will get a better deal going through a mortgage broker directly anyway. They have many different lenders that they work with to get you the best rate possible. Just make sure you don't have your credit pulled more than 3 times, otherwise it will start harming your credit. The good thing about mortgage brokers is that when they put your application up for 'bid' so to speak, all the lenders competing for your loan do not each pull your credit. So try to get some recommendations for a mortgage broker in your area.

Dolores Said:

Mortgage Comparison?

We Answered:

The key things average consumers are worried about are the interest rate, closing costs, type of note (Fixed or Adjustable), and if there is a pre-payment penalty.

No closing costs is a scam that loan officers use to make a deal appear better than it actually is. Any loan officer can offer you a no closing costs loan, but the interest rate will be higher than a loan with closing costs. The reason for this is because loan officers are paid a comission from a bank based on which rate they sell you. Therefore, if a loan officer sells you a higher rate, he will recieve a greater comission check from the bank and pay the closing costs himself.

Here is an example...

Loan with Closing Costs:
- Rate 6.25%
- Closing Costs Associated with the loan; $2000
- Closing Costs borrower pays: $2000
- Loan officer comission on 6.25%: $1200
- Closing Costs Loan Officer Pays: $0
- Loan officer total comission: $1200


Loan without Closing Costs:
- Rate 6.875%
- Closing Costs Associated with loan: $2000
- Closing Costs Consumer Pays: $0
- Loan officer comission on 6.875%: $3500
- Closing Costs Loan Officer Pays: $2000
- Loan officer total comission: $1500

As far as the other items...

Go with a fixed rate note with no pre-payment penalty. The closing costs should never be over $2500 (not including pre-paid expenses)

Cory Said:

Why are variable rate mortgages misrepresented as trackers?

We Answered:

Even when BoE trackers were being sold, some lenders were selling 'discounted rate trackers' and 'inter Bank rate trackers' and all sorts of other names that tracked everything under the Sun ...

Some products called 'Base Rate Tracker' ACTUALLY tracked the inter-bank rate and NOT the BoE rate = this caught out a very large number of people ...


.... and yes, people do fall for it = many people can't even work out a 'percentage', let alone understand what Compound Interest means to their Credit Card balance when making minimium payment ... and as for AER, BoE, RPI & CPI many people simply have no idea what you are talking about ...

On the other hand, a lot of BoE - x% deals where sold, (some > -0.5%) ... and SOME lenders actually did PAY their borrowers when eg. their BoE - 0.75% deal resulted in the lender owing the borrower 0.25% every month :-)

Rebecca Said:

mortgage comparison question?

We Answered:

Generally speaking large builders can provide you with below market rates and fee's if you go through their lender. Often builders will also pay a high percentage of your closing costs if you go with their lender only. Companies like Horton, Pulte, K&B, Toll, etc have special loan rates and packages that beat the market by a up to a full point that will save you literally $10,000's over the lifetime of a loan.

A few months ago my son purchased a brand new home from Pulte. Pulte paid $10,000 of his closing costs, and a slightly below market rate, but he had to use Pulte's lender to get these benefits.

Builders can't demand that you use their lender but often it is to your advantage to do so.

At least in my state, title companies cannot cut their title insurance fees. Those fee's are approved the the State Insurance Commissioner". A few years back both Fidelity National Title and First American Title ended up paying very large fines for giving discounts to some buyer but not to others. Every fee adjustment has to be approved by our state insurance commissioner.